Peak Performance Business Blog

Optimal Time for a Buyout

Monday, May 09, 2011
Acquisition Advisors has a great article on their blog today discussing the opportune time many businesses have to sell their business.  The key takeaway I had from the article was how high performing businesses are paid a premium for their performance (regardless of when they decide to sell).  Take a quick read below:

If your company’s earnings have not suffered greatly during the recession, now might be the very best of all times to execute a management buyout. Buyers are out in mass and paying premiums for companies that have performed well during the recession.

We did not see this coming but Premiums are being paid for companies that are selling today. Companies that would have topped out at five or six times EBITDA three years ago are going for seven, even eight today.


The logic is simple -- an imbalance of supply and demand.


On the supply side there are very few companies in play today. Most businesses have performed poorly during the recession and their owners are not proud of the financial performance. They know the time to sell is when profits are high.

On the demand side, the number of buyers has not declined from where it was three and four years ago. The numbers of individual buyers has held steady, maybe even increased. The number of industry (“corporate”) buyers has declined only slightly. The number of private equity groups has held steady and they’re more aggressive than ever.


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Top performing companies are not accidents!  Their results are the product of very conscious decisions and investments made over a period of time.  Sure there is some luck involved, but hard work often creates good luck.  Organizations that have created a clear vision and mission, have effectively communicated that vision to the organization to capture their focus reach a level of productivity that other business just can reach or each understand how it's accomplished.  That's what we do; we connect purpose with action and let the results speak for themselves. 

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